In its annual income statement, Fox Co. reported incomebefore income taxes of $300,000. Foxestimated that, because of permanent differences, taxable income would be $280,000, and during the year Fox made estimated tax payments of $50,000, which were debitedto income tax expense. Fox is subject to a 30% tax rate. What amount should Fox report as income tax expense?

A. $50,000

B. $84,000

C. $34,000

D. $90,000

Question

Business

Kenya Wallace

29 February, 07:02

In its annual income statement, Fox Co. reported incomebefore income taxes of $300,000. Foxestimated that, because of permanent differences, taxable income would be $280,000, and during the year Fox made estimated tax payments of $50,000, which were debitedto income tax expense. Fox is subject to a 30% tax rate. What amount should Fox report as income tax expense?

A. $50,000

B. $84,000

C. $34,000

D. $90,000

+1

Answers (1)

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Theresa · Answer 1

B. $84,000

Explanation:

The computation of the income tax expense is shown below:

Income before income tax $300,000

Less: Permanent difference - $20,000

Taxable income $280,000

Tax rate is 30%

Income tax expense $84,000 ($280,000 * 30%)

The $50,000 do not impact the overall income tax expense but it decrease the amount of income tax payable